Even Pats and Eddy have been cutting back on the champagne in the current credit crunch. Yesterday it was announced that the Absolutely Fabulous ladies' favourite hang-out, Harvey Nichols, has seen its profits plummet faster than a woman in 5-inch heels, with a drop of 40% to £10m in what the chief executive, Joseph Wan, described as a "freefall" since last October's banking crash, and a fall in sales of 5%.

"A lot of wealth has evaporated and cannot be replaced overnight," Wan told Retail Week magazine. "The total consumption pool has shrunk since last year. We must adapt."

Harvey Nichols's distinguishing quality in the crowded British department store market has long been high-end luxury, separating it from the stuffiness of Harrods and the more cutting-edge cool of Selfridges. It has been so successful at this self-branding that each time a Harvey Nichols is built - it has seven stores across the UK, and is in Dublin, Riyadh, Istanbul and Dubai - it is touted as proof that the city in question is "regenerating".

So it is unsurprising that when Wan refers to "adapting", he does not mean replacing Pucci with Primark on the rails. Instead, he is focusing on better stock management and, perhaps more importantly, appealing to tourists keen to take advantage of the falling pound.

A marketing campaign has been launched this week, yet this may only help the store's London branch. Wan insists he is committed to store openings in Nottingham and Kuwait.

Last night Harvey Nichols confirmed its profits for the year ending 31 March 2009 will be approximately £10m, against £18m for the previous year, attributing this to a sudden drop in sales which began in October, "in line with other luxury brands".

It said it had seen a "significant increase in spending by international shoppers contributing to stronger retail sales in London compared to elsewhere in the UK". In particular there was a big rise in "affluent Chinese" - who were up 84% since last year - and shoppers from Arab countries, Russia and Brazil.

Yet it remains to be seen how willing tourists are to spend their money. Department stores around the world are all struggling. Last month the US store Saks posted a net loss of $98.8m (£68m) and a fall in sales of 14.9%.

Saks' chief executive, Steve Sadove, described the trading climate as the most challenging the company had faced in its 84-year history. In January it announced it was cutting 1,100 jobs. , Macy's too announced last month that it is to cut 7,000 jobs and close 11 stores.

Last week the Dallas-based luxury department store Neiman-Marcus posted its first loss in recent memory - $509.3m for the quarter ending in January, against a profit of $44.3m the same time last year. Its chief executive, Burton M Tansky, voiced a sentiment that will surely strike home at Harvey Nichols: "Our customer wants luxury. She has not shown any indication to move away from it. What she is doing is she is just not shopping."